Equipment Breakdown Insurance for FL Adjuster Claim Professional Exam

Overview

Businesses rely on electrical and mechanical equipment (e.g., boilers, HVAC systems, refrigeration, computers) for operations. Standard property insurance excludes losses from:

• Explosion of steam boilers, pipes, engines, or turbines
• Artificially generated electric current (e.g., arcing) damaging devices
• Mechanical breakdown, including rupture or bursting by centrifugal force

Equipment Breakdown Insurance Policy (EB 00 20)

Coverage is provided through the ISO Equipment Breakdown Protection Coverage Form (EB 00 20).

Covered Equipment

• Equipment operating under internal pressure or vacuum
• Electrical or mechanical equipment for generating, transmitting, or using energy
• Communication and computer equipment
• Utility-owned equipment solely providing service to the insured’s premises

Covered Breakdowns

• Pressure or vacuum equipment failure
• Mechanical failure (e.g., rupture or bursting by centrifugal force)
• Electrical failure, including arcing

Coverage Options

Coverages are specified in the declarations page with dollar limits or "INCLUDED."

Coverage	Description
Property Damage	Direct damage to owned property or property in the insured’s care
Expediting Expenses	Costs for temporary repairs and hastening permanent repairs/replacements
Business Income & Extra Expense	Loss of income and extra costs to continue operations (requires annual report of values)
Contingent Business Income/Extra Expense	Extends coverage to non-owned/operated equipment locations
Spoilage Damage	Loss of products/materials due to power, heat, or refrigeration failure
Utility Interruption	Extends business income, extra expense, or spoilage for utility equipment breakdowns
Newly Acquired Premises	Covers equipment at new locations (same type, same limits, for specified days)
Ordinance or Law	Covers loss due to demolition or repair costs from building ordinances
Errors and Omissions	Covers losses from unintentional application errors
Brands and Labels	Costs to alter labels on salvaged merchandise

Sublimits ($25,000)

• Hazardous substance cleanup
• Ammonia contamination
• Water damage
• Consequential loss
• Data and media losses

Common Exclusions

• Ordinance or law (unless optional coverage is elected)
• Earth movement (earthquake)
• Nuclear hazard
• War or military action
• Flood
• Fire or combustion explosion (except in steam/gas equipment)
• Lack of power, light, heat, steam, or refrigeration
• Fungus, wet/dry rot
• Virus, bacterium, or disease-causing microorganisms
• Explosion of unconsumed fuel
• Testing (pressure or electrical tests)
• Water/chemicals used to extinguish fires
• Depletion, deterioration, corrosion, erosion, or wear and tear
• Breakdowns caused by aircraft, vehicles, freezing, lightning, riot, vandalism, sinkhole, smoke, sprinkler leakage, or weight of ice/snow

Valuation

Replacement cost coverage applies if repaired/replaced within 24 months; otherwise, actual cash value (ACV). Obsolete/useless equipment is not covered.

Selected Endorsements

Actual Cash Value (EB 99 59)

Modifies valuation for older equipment to the lesser of:

• Cost to repair/replace on the same or another site
• Actual cash value at the time of breakdown

Business Income—Report of Values

For business income coverage, the insured must submit an annual report of values within three months of the report date, detailing:

• Actual net profits, fixed charges, and expenses for the past 12 months
• Estimated values for the upcoming 12 months

Used to determine loss payments and final premium.

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